Zynga's shares took a dive after the social gamer announced that it was writing off half the value of OMGPOP, the developer of Draw Something acquired earlier this year.
The social gaming firm cut its outlook for the year for the second time and said it expects a loss in the third quarter while also slashing up to $95m off …

COMMENTS

Tip for ya...

... stop paying stupid prices for stupid companies who have no proven financial revenue or forecasts to back up the valuation. It won't come as a big shock when value's get halved/slashed and the original product you were fawning over nosedives as it was proven to be a fad.

Free but for $99.99 worth of crapberries

Trouble is they've run out of gullible fools who are prepared to spend real money on a virtual game, just to speed things up.

Apple has closed the "it was my kid" loophole. Google the same, even WOW with it's once fanatical base of fans is having trouble convincing people to pay for a game, and then pay again next month, and the month after.

The only one that seems to be holding it's own, is xbox live, but perhaps that's because the price makes the online part work for a number of games.

Re: Free but for $99.99 worth of crapberries

Trouble is they've run out of gullible fools who are prepared to spend real money on a virtual game, just to speed things up.

I'm fairly certain that's a bottomless well of income even today... its just that they need new ways to tap it. Zynga has demonstrated a singular lack of talent and imagination beyond the friendly cartoony flash face they slapped over a big money-sucking Skinner box when they first started in the "social gaming" racket. Everything they've done since has just been a regurgitation of that same basic design, and it just doesn't have any long term income potential... they need to make new, interesting wrappers for their money machine to keep the punters coming and they just can't do it. The purchase of OMGPOP was clearly desparation, and a demonstration that Zynga have no talent in investment or acquisitions, either.

Their basic business model remains sound, and even if they die an unlamented death there will be plenty of other companies waiting to carry on in the same vein and do well enough.

Why does these companies never learn? They pay ridiculous amounts of money for a stupid game/service that is the talk of the minute, then people very quickly get bored and then they lose vast sums of money.

Bebo and AOL spring to mind. I thought Instagram would do the same but it's stuck about longer than I thought...

The only people...

...that I know (or knew, as is now the case) whom still play Draw Something is my ex, her mum and sister. The only reason I still played it was because my ex is an artist and her drawings were actually damned good little works of art. Everyone else I know stopped playing ages ago.

the mistake was

They took a decent game (draw something) and destroyed it utterly with a million ads and general 'Zygafication' that was not needed or wanted by the user base. Then they were surprised when everyone stopped playing it.

I don't think the investors are too stupid. Coming from the UK, we have a far too conservative investing streak. People only want to invest in something that is a "sure thing". We're too cynical.

The investors in Zynga, knew the risks. It's acceptable to invest in 10 failing Zyngas as long as one of them turns into a Google or an Amazon. As long as "sensible" pension funds steer clear, I don't see Zynga failures as a problem.

And you know what? When Zynga fails, the founder will go off and make another company, and another, until he dies in penury or becomes a zillionnaire. That's how Americans do it. And not only him, some of the developers will take the experience on the chin and go off and do their own start ups and it only takes 1% of them to become a global tech giant. This is the game Americans play that we in the UK cannot grasp.

And I envy them. In the UK we have the odd Richard Branson type now and again, but nowhere near enough. I even read an article about Tech City the other day (we love to put them down too), stating the total lack of ambition by most startups to become global names, or to compete on a global scale. Just sums it up really.

When we in the UK can build an Amazon, Apple, Google, Oracle, Microsoft, Yahoo, Facebook (yeah, they make money), Red Hat etc, we can start laughing at the Zyngas of this world.